User:Foggy Morning/Notes

Inflation accounting

Software example from SAP Inflation accounting

• Restate G/L accounts and open payables and receivables for inflation (general and specific price-level changes)
• Revaluate assets, including inventory

Income statement general price-level adjustment (Wolk p.5)

	2001	2002	2003	Total
Revenue	33,000	36,302	39,931	109,233
Depreciation	30,000	31,500 (a)	33,000 (b)	94,500
Operating income	3,000	4,802	6,931	14,733
Purchasing power loss	-	1,500 (c)	3,000 (d)	4,500
Net income	3,000	3,302	3,931	10,233

(a) 30,000 x 105/100 = 31,500

(b) 30,000 x 110/100 = 33,000

(c) (30,000 x 105/100) - 30,000 = 1,500

(d) (63,000 x 110/105) - 63,000 = 3,000